Is network marketing dead? Let’s talk about this fully. Shall we?
What Is Network Marketing?
Network marketing is a business plan where a business owner compensates its distributors for each person they convince to go into the business. The number of rewards is not normally based on salaries but it is equivalent to the number of distributors brought into the business.
That simply means that the more distributors a distributor enlist, the higher the reward. Building a network of distributors is quite necessary for network marketing, these distributors or salespersons will assist you in closing sales with innovative generation.
Many reputable organizations are adopting the network marketing business plan, but some have been denounced as fraudulent systems of making money based on recruiting an increasing number of distributors.
How Does Network Marketing Work?
Network marketing is also known as Cellular marketing, Multilevel marketing (MLM), Affiliate marketing, consumer direct marketing, or home base business.
Companies that adopt network marketing business plans often create a tier of distributors or salespersons, distributors are encouraged to recruit new distributors under them which are often referred to as downlines, and the distributor that creates a new tier is often referred to as upline.
Uplines earn commissions on their sales and also the sales made by their downlines. A new tier can also be created by downlines, upgrading them to uplines. However, the newly upgraded uplines tend to earn commission from the sales made by their new downlines.
That said, the old upline earns more commission when his/her downlines create new tiers (i.e, when downlines get upgraded to uplines). This is because no matter how many people you bring into the business, you are still under someone else’s network, hence, generating more commission for your upline.
In essence, the earnings of distributors depend on the recruitment and selling of products. Those who get into the business early and are in the top tier tend to earn more.
Advantages And Disadvantages Of Network Marketing
Business generally is all about taking risks, no matter how much money you generate from a business, there are some downsides. That means, that whatever has an advantage also has its disadvantage. Let’s take a quick review of the merit and demerit of network marketing.
The sole advantage of network marketing is that the distributors in the top tiers earn an impressive amount of money, while the disadvantage is that, the distributors in the lower tiers earn less. The company makes more money by selling expensive products to new distributors on the chain.
The good part of network marketing is that an individual with good sales skills and energy can create a profitable business with moderate investment.
Network marketing might sound too good to be true, but some network marketing schemes are scams and pyramid schemes. According to FTC, an organisation that compensates distributors based on actual sales to customers tends to be more reliable than multi-tier marketing plans.
Is Network Marketing A Good Idea?
Before engaging in Network marketing, there are some things you should put into consideration, ask yourself some questions to know if they’re reliable or not. Questions to ask:
- Did the organisation pitch network marketing as a chance to make money by recruiting distributors, or selling products?
Some organisations will focus more on recruiting distributors than selling products, which means something is not right, because you need to pay for registration in most network marketing organisations, that is, they gather plenty distributors as possible, and then all of a sudden it crashes.
- Are you personally excited about the products the network marketing organisation is selling?
When you are enthusiastic about your products, people tend to patronize you more. Because you’ve used them and testified. When convincing customers, you’ll be speaking from experience.
- Do you know about the track record of the organization’s founder?
It is important to know about the track record of the organization’s founder because some people are actually into the business of network marketing scams, that is, they establish a network marketing scheme and dupe people, then run off and start up another one.
- Are people you know excited about the products?
In the case where you know people who have used the products you’re about to sell, ask questions about the products, are they really satisfied with what they bought? Because some organisations sell bad products.
- Is the organisation promoting the product effectively?
Your job as a distributor is quite different from that of a promoter. Although, before you can effectively make sales you need to do some promotion. However, the organization must promote their business and its duty to make sales.
- Do you foresee making a profit in no distant time, or are you venturing into a long-term business?
There are some network marketing that is a waste of time, you need to foresee the profitability of the business. The best way to do this is to have a target and ask yourself if you can meet up to that target.
Is Network Marketing Dead?
No, network marketing is very much alive and active. People still make money from network marketing through the following sources: making sales and having commissions from your downlines.
This business is completely legal and legitimate. Some examples of network marketing are:
Tupperwave: Tupperwave is an American company that sells home products including storage, preparation, beauty products and services products for the kitchen and home.
Avon: Avon Company focuses on beauty, household products and personal care. The company’s headquarters is situated in London, England. And they’ve been in the marketing business for over 130 years.
Roden and Fields: Roden and Fields have two lines of business, the product line and the business opportunity line. The product line deals with product sales and recruitment of salespersons.
Amway: Amway has been in the network marketing business since the late 1950s. The company sells home care, health and beauty products. Amway and its subsidiary companies reported sales of over $8 billion in 2019.
Harbalife: This Company sells and develops dietary supplements, they’ve been in business since 1980 and have over 9,000 employees worldwide.
Mary Kay: Mary Kay is a renowned beauty company. They’re among the top 10 beauty companies worldwide. With its headquarters situated in Texas, United States. The company was founded by Mary Kay Ash in 1963.
Network marketing is still in use to date, some companies use this marketing plan to get more customers and encourage existing distributors. It’s all about business and profit.
However, to be successful in network marketing you have to be consistent and give it your all, every successful network marker started from somewhere, and with dedication and hard work, you’ll eventually achieve your goal.
Was this information useful? Read similar posts recommended for you below.